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New mortgage rules stifling middle-age borrowers

Mortgage lenders are complaining they are powerless to help older buyers because of the new rules introduced earlier this year.
New mortgage rules stifling middle-age borrowers

 

Banks and building societies say that under the Mortgage Market Review they are no longer allowed to lend to anyone who would still be making loan repayments beyond the age of retirement.

 

Consequently, many borrowers over the age of 40 have become ineligible for a mortgage over the standard 25-year term.

 

The situation is particularly unfair because many people cannot afford to purchase a home until middle age, lenders have said. They have described the situation as “a cause of real concern”.

 

The Mortgage Market Review (MMR) was introduced in April to reduce irresponsible lending and to ensure that borrowers could afford to repay their loans.

 

The side-effects of this have included tighter affordability checks and delays to applications, which have driven thousands of people to seek the assistant of mortgage brokers.

 

More than 60% of mortgages were arranged by intermediaries during the third quarter of the year, according to the Council of Mortgage Lenders.

 

The Intermediary Mortgage Lenders Association, which represents the 24 lenders that have raised concerns, says the Financial Conduct Authority needs to find a solution to stop a large proportion of borrowers becoming frozen out of the market.

 

Peter Williams, the IMLA executive director, said: "To avoid a situation where regulation brings about the extinction of mortgage terms that stretch into retirement, we need clarity and confirmation about where the boundaries of responsible lending truly lie".

 

Keith McDonald

Which4U Editor

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